In his explosive testimony before the House Financial Services Subcommittee, Harry Markopolos details the frustration he faced in trying to alert the otherwise preoccupied Securities and Exchange Commission. This unheeded whistleblower is now blowing the top off of the long-kept and well-guarded secret that the regulation of Wall Street is less about vigilance and too often nothing more than shady office politics. As the Associated Press' Marcy Gordon so perfectly captured in her story Lawmaker says SEC hindering House's Madoff probe

Because of the SEC's inaction, "I became fearful for the safety of my family," Markopolos said.

"The SEC is ... captive to the industry it regulates and is afraid" to bring big cases against prominent individuals, Markopolos said. The agency "roars like a lion and bites like a flea" and "is busy protecting the big financial predators from investors."

While the SEC is incompetent, the securities industry's self-policing organization, the Financial Industry Regulatory Authority, is "very corrupt," Markopolos charged. That organization was headed until December by Mary Schapiro, President Barack Obama's new SEC chief.

After all these years as a leading critic of Wall Street's failed regulatory system, it nearly brought tears to my eyes --if not vindication-- to finally see that someone else got it! And how wonderfully Mr. Markopolos put it: Incompetency versus Corruption. What a lovely choice that now faces the public and the industry. We get to choose between what Markopolos describes as an incompetent SEC or a very corrupt FINRA.

Today, a few of you already reminded me that in September of last year I considered a very similar choice. I quoted Woody Allen's comment in my blog As Woody Allen Said in connection with another one of my diatribes against regulatory incompetence:

More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.

How sad and sordid it all has become. They wouldn't listen to Markopolos. They fired Gary Aquirre when he sought to aggressively do his job at the SEC. They wouldn't even interview me. And now we are left with a choice between incompetency or corruption. Geez.

I watched Bloomberg TV just to see his testimony. It was quite interesting and sad at the same time. Although I suspected there always was a conflict of interest in the oversight efforts at both the SEC and FINRA, I never imagined it was so negligent and incompetent.

I expect things will change going forward. We need to restore confidence in a hurry.

I’m not surprised AT ALL. You guys should check out Born to Steal. Gary Weiss (also author of Wall Street vs. America) makes the NASD look like total buffoons as Louis Pasciuto rips off investors in over 18 bucket shops and boiler rooms in about three years. Then there’s the RR stories like the FL based broker (Gary Gross?) who only had 43 disclosures on his CRD before getting removed from the industry. Way to go FINRA! Check this guy out online…the U4 is almost 100 pages. You just have to laugh at some point.

Have you read The Wolf of Wall Street yet or by some other means acquired an opinion on Jordan Belfort’s actions at Stratton Oakmont? He’s been making the media rounds recently and ripping the regulators in a fairly amusing way.